The U.S. Court of Appeals believes that the SEC's reasons for rejecting Coinbase's cryptocurrency regulation petition are insufficient

ChainCatcher News, the U.S. Third Circuit Court of Appeals is reviewing the decision by the U.S. Securities and Exchange Commission (SEC) to dismiss Coinbase's petition for regulatory rulemaking on cryptocurrency, questioning the reasoning as too limited.

In July 2022, Coinbase requested that the SEC propose and adopt regulatory rules regarding "securities offered and traded through digital native methods," including clarifying which crypto assets qualify as securities.

The SEC dismissed the petition at the end of 2023, prompting Coinbase to petition the appellate court to compel the SEC to respond. Judge Thomas Ambro stated that the SEC is not required to provide a detailed explanation for its dismissal, but the record should contain substantive content. He described the SEC's dismissal as "almost devoid of content."

Coinbase's Chief Legal Officer Paul Grewal stated on social media that the SEC "refuses to provide a reasonable explanation for its simple dismissal while arbitrarily enforcing against our industry under the guise of authority."